Tribunal overturns demand, allows appeal on Cenvat credit & penalty under Central Excise Act.

The Tribunal allowed the appeal, setting aside the adjudication order confirming the demand of Cenvat credit and penalty under Section 11AC of the Central Excise Act. The Tribunal ruled in favor of the appellant, noting that they had paid more duty than the credit denied and had started paying duty in response to show cause notices. Citing a decision of the Gujarat High Court upheld by the Supreme Court, the Tribunal held that credit cannot be denied when duty is accepted by the Revenue, ultimately overturning the Revenue's demand.

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Issues:
The appeal against the adjudication order confirming the demand of Cenvat credit and imposing a penalty u/s 11AC of the Central Excise Act.

Adjudication Order:
The appellant contested the denial of credit on duty paid on inputs for cutting and slitting of jumbo rolls, arguing that the process undertaken amounts to manufacture. The Revenue initially issued show cause notices demanding duty, which led the appellant to start paying duty and availing credit. However, a subsequent show cause notice denied credit on the ground that the activity does not amount to manufacture.

Appellant's Contention:
The appellant highlighted that they had paid more duty than the credit denied, including duty paid from PLA. They cited a decision of the Hon'ble Gujarat High Court, upheld by the Supreme Court, to support their argument that credit cannot be denied when duty is accepted by the Revenue.

Revenue's Argument:
The Revenue relied on a Supreme Court decision to assert that cutting and slitting of jumbo rolls does not amount to manufacture, justifying the demand made.

Tribunal's Decision:
The Tribunal noted that the appellant initially did not pay duty on the activity but started paying duty and availing credit in response to show cause notices. Considering the conflicting opinions, the Tribunal referenced the Gujarat High Court decision to rule in favor of the appellant. The impugned order was set aside, and the appeal was allowed.

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